Why NY, NJ and CT are warring over how to split $14B in transit aid (and it's been months)

Imagine there’s a sandbox where the transit agencies from New York, New Jersey and Connecticut are supposed to be playing nicely together.

Except, in this sandbox, there’s $14.2 billion that needs to be shared.

Let’s just say not everyone is playing nicely.

The states have been at war for six months over the federal stimulus funds from the Coronavirus Response and Relief Supplemental Appropriations Act (CRRSAA) and American Rescue Plan Act (ARPA), according to letters penned between the state agencies and obtained through a public information request.

New Jersey and Connecticut say they are in agreement about how the funds should be split. New York says it deserves a larger share of the money. 

If New York gets its way, the agencies that serve New Jersey and Connecticut commuters — many of whom work in New York — could lose out on hundreds of millions.

What’s at stake

The agencies fighting over the majority of the funds — the Metropolitan Transportation Authority, NJ Transit and the Connecticut Department of Transportation — are desperate for dollars to avoid cutting service and staff. 

New Jersey and Connecticut want the money split using guidance from the Federal Transit Administration, as has typically been done with this type of grant money.

"These calculations support our historical sub-allocation process used for fiscal year FTA funding, completed annually among our agencies, and the methodology and calculations used during the Coronavirus Aid, Relief and Economic Security Act (CARES) splits," Kevin Nursick, a Connecticut DOT spokesman, wrote in an email.

New York, on the other hand, devised its own method of splitting the funds that it says “carries forward the congressional intent to provide additional funding to public transportation agencies with the greatest need,” according to an April 8, 2021, letter to New Jersey and Connecticut from Ronald Epstein, assistant commissioner of policy and planning for the New York Department of Transportation.

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In one of New York’s calculations, it would receive around $687 million more than the FTA guidance suggests. By this math, New Jersey's cut would be slashed, to about $673 million less than the FTA guidance suggests, and for Connecticut it would be $13.7 million less.

Epstein’s letter goes on to justify New York's calculations by suggesting the money should be split so as “to direct resources to systems that suffered the greatest losses.” He said the MTA used its $4 billion in CARES Act stimulus money — the first round of federal aid approved in March 2020 — faster than any other transportation agency and could be forced to make layoffs, cut service and reduce the capital program.

These challenges are not unique to New York.

Transportation leaders from around the country, including MTA Chairman Pat Foye and NJ Transit President and CEO Kevin Corbett, held joint press conferences during the first several months of the pandemic to express the potential devastation the country’s transit agencies faced and to argue for more federal aid.

“All of our agencies need additional funding streams distributed not by the same old formulas, but based on needs stemming from this unprecedented health crisis," Foye said in May. "The traditional formulas don’t work in general, but they particularly don’t work during this pandemic; for instance, the epicenter is New York City, New York state, as well as New Jersey."

Seven months later, in late December, the CRRSAA was signed into law and New York began to devise a new formula to split the money that favored the state, even though the virus had spread well beyond the New York metropolitan area by then.

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New Jersey Transportation Commissioner Diane Gutierrez-Scaccetti called New York’s methodology “incorrect,” adding that New Jersey and Connecticut based their figures on calculations provided by the FTA headquarters and two regional offices.

“NYSDOT is relying on its own ‘interpretations of legislative intent’ and a statement that MTA ‘suffered great losses’ to support a newly ‘proposed methodology [that] is fair and equitable,’ ” Gutierrez-Scaccetti wrote. “NJ TRANSIT and CTDOT have also ‘suffered great losses’ due to the pandemic.”

How it usually works

Well before the pandemic, New York, New Jersey and Connecticut routinely got together on an annual basis to negotiate how to split up FTA grant money distributed through what’s known as Urbanized Area (UZA) apportionments. In other words, this federal money is distributed to areas based on population size, route mileage and other factors.

For example, New York, New Jersey and Connecticut are allocated money for the New York-Newark region, which includes transit service in the tri-state area. The FTA provides guidance on how to split that money using a formula, but ultimately it's up to the overlapping states in a particular region, or UZA, to decide who gets what.

The suggested splits from the FTA are "non-binding," according to an FTA spokesman, who said, “The law gives discretion to governors and their designated recipients to determine how funds will be allocated."

Typically, the states follow the guidance provided by the FTA.

Asked if there have been lengthy negotiations over splitting this money in the past, Connecticut DOT spokesman Nursick wrote: "No, the historic methodology in place on the sub-allocation of these funds has always been agreed to."

In fact, the three states used this process to split CARES Act money, the first round of federal coronavirus stimulus funds, approved in late March 2020.

Reaching an agreement to split up those funds took a matter of weeks.

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Similarly, New Jersey successfully negotiated with other states — Pennsylvania and Delaware — where they have regional overlap for CRRSAA and ARPA aid and have begun to request those funds.

So why did New York go on the offensive for more money this time?

"Our friends at New Jersey Transit continue to sit on a significant portion of the original CARES Act funding they received in April 2020 while the MTA exhausted its allocation almost a year ago," said Ken Lovett, senior adviser to Foye, the MTA chairman, who is leaving the position at the end of July. "Based on Congress’ clear intent and the language of the statute, the MTA — which is facing a $2 billion shortfall even after the generous federal relief received — clearly deserves the funding because of its greater needs.”

To date, NJ Transit has used about 91% of its CARES Act funds, including $955 million for its shortened fiscal year 2021 spending plan, and filling operations budget gaps with money from the capital fund.

What happens next?

Until an agreement can be reached among the three states, the stalemate will continue — and the $14.2 billion at issue will remain unavailable.

The FTA does not intervene in these issues, nor does it have an adjudication process when the parties cannot come to an agreement.

But there is a deadline.

The FTA wants grant applications submitted by July 20 so it has time to review them. 

If the states miss that deadline, they have until about the end of September to submit their grant applications. After that, the FTA'S Transit Award Management System closes and financial activities don't resume until late October. 

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Without access to those funds, the agencies will be forced to find other revenues, which are in short supply, to cover expenses until then.

Gutierrez-Scaccetti, the New Jersey transportation commissioner and chair of NJ Transit's board, implored New York in her June letter to sign the agreement New Jersey and Connecticut agreed to.

“As our customers begin the process of returning to their day-to-day activities, they will rely on all of us to provide the public transit services they need,” Gutierrez-Scaccetti wrote in the letter, also signed by Connecticut Transportation Commissioner Joseph Giulietti. “It is time to bring this matter to a mutually successful conclusion.”

Colleen Wilson covers the Port Authority and NJ Transit for NorthJersey.com. For unlimited access to her work covering the region’s transportation systems and how they affect your commute, please subscribe or activate your digital account today. 

Email: cwilson2@gannettnj.com 

Twitter: @colleenallreds